Household Debt During the Financial Crisis: Micro-Evidence from Chile
AbstractWe examine evidence from a data panel from 2006 to 2009 to explore how chilean households were affected by the negative income shock observed during the recent financial crisis. our results show that there is a negative and significant relationship between income shocks and changes in consumption debt. this suggests that increasing debt allowed households to smooth consumption during the financial crisis and provides new empirical evidence about the importance of financial constraints in a developing country. we find evidence of heterogeneous effects by type of consumption debt and across households. our results show that reduction in income increased indebtedness with banking institutions, but not with non-banking creditors. across households, these results are driven mainly by those with financial assets and low levels of indebtedness before the crisis.
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Bibliographic InfoPaper provided by Central Bank of Chile in its series Working Papers Central Bank of Chile with number 695.
Date of creation: Jul 2013
Date of revision:
Other versions of this item:
- Roberto Alvarez & Luis Opazo, 2013. "Household Debt during the Financial Crisis: Micro-Evidence from Chile," Working Papers, University of Chile, Department of Economics wp383, University of Chile, Department of Economics.
- NEP-ALL-2014-02-02 (All new papers)
- NEP-LAM-2014-02-02 (Central & South America)
- NEP-OPM-2014-02-02 (Open Economy Macroeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Thomas Philippon & Virgiliu Midrigan, 2013.
"Household Leverage and the Recession,"
2013 Meeting Papers, Society for Economic Dynamics
335, Society for Economic Dynamics.
- Midrigan, Virgiliu & Philippon, Thomas, 2011. "Household Leverage and the Recession," CEPR Discussion Papers 8381, C.E.P.R. Discussion Papers.
- Thomas Philippon & Virgiliu Midrigan, 2011. "Household Leverage and the Recession," NBER Working Papers 16965, National Bureau of Economic Research, Inc.
- Thomas Philippon & Virgiliu Midrigan, 2011. "Household Leverage and the Recession," 2011 Meeting Papers 261, Society for Economic Dynamics.
- Michael D. Hurd & Susann Rohwedder, 2010.
"Effects of the Financial Crisis and Great Recession on American Households,"
NBER Working Papers
16407, National Bureau of Economic Research, Inc.
- Michael Hurd & Susann Rohwedder, 2010. "Effects of the Financial Crisis and Great Recession on American Households," Working Papers, RAND Corporation Publications Department 810, RAND Corporation Publications Department.
- Atif R. Mian & Amir Sufi, 2010. "Household Leverage and the Recession of 2007 to 2009," NBER Working Papers 15896, National Bureau of Economic Research, Inc.
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